Investing in Education to Build a More Durable Healthcare Workforce

By Elizabeth Roberts and Arrun Kapoor

A shortage of healthcare workers and persistent high turnover continue to strain health systems. Even before the COVID-19 pandemic, healthcare providers saw a growing gap between clinician supply and demand; in the years since, that gap has grown into a chasm. Nurses are leaving the workforce in droves, leading to tighter budgets for health systems and burnout among those who remain.

Data from the National Council of State Boards of Nursing revealed that 100,000 nurses left the workforce during the pandemic, and almost 900,000 — one-fifth of the nation’s total registered nurses — intend to leave by 2027. That turnover is already having consequences for patients. In a survey released in March, 88% of nurses stated that patient care is being negatively impacted by staffing shortages, and more than half (63%) report being assigned to care for too many patients at a time.

Even as the country moves past the pandemic, the trend looks likely to persist for several reasons:

• Churn: Many experienced healthcare professionals are reaching retirement age or battling burnout, and the problem is not confined to front-line staff. Nearly one-third (31%) of hospital nursing leaders are planning to leave their jobs in the near future, with burnout a driving factor for most according to a 2024 survey from AMN Healthcare.
• Budget challenges: Hospitals tend to operate on thin margins, and they have recently seen some of their worst budgetary years in decades. Many leaders have to focus on putting out fires that prevent them from thinking strategically about attracting, training, and retaining clinical talent — even for investments with clear long-term ROI.
• Reliance on temporary staff: Before the pandemic, the vast majority of clinical staff members were full-time health system employees. That percentage dropped significantly as health systems were forced to rely on temporary contract staff clinicians (via staffing agencies) to meet their operating needs. While temporary staffing figures have fallen from the peaks of 2021 and 2022, they still remain higher than pre-pandemic levels. Contract clinicians cost more per hour than staff clinicians and require constant training and replacement given their per diem or weekly status.
• Insufficient training: Limited capacity in nursing schools and medical programs contributes to a shortage of qualified healthcare professionals entering the workforce. In 2021, U.S. nursing schools turned away 91,938 qualified applications from baccalaureate and graduate nursing programs due to an insufficient number of faculty, clinical sites, classroom space, clinical preceptors, and budget constraints.
• Specialty shortages: Certain healthcare specialties, such as primary care and mental health, face particularly acute shortages due to factors like lower reimbursement rates and lack of resources. For rural communities and communities of color, the shortage of doctors and nurses for primary care is particularly pronounced.
• Aging population: As the U.S. population ages — and lives longer than ever before — the demand for healthcare services is increasing, exacerbating the shortage of healthcare workers. By 2030, roughly one in every five Americans will be older than 65, according to the U.S. Census Bureau.

The vicious cycle of high nurse turnover

While turnover is widespread across the healthcare industry, nurses are among those most impacted. Persistent elevated turnover leads to challenges in onboarding and orienting nurses, which leads to a vicious cycle of lackluster training experiences and increased turnover. On average, it takes 12-24 months to train a new graduate nurse. But most churn is already happening before the nurses reach the one-year mark.

The consequences of increased churn among nurses are eye-opening. The cost of turnover is estimated at $53,000 per registered nurse; in speaking with SJF Ventures, leadership at a top 10 U.S. hospital system suggested that improving retention could realistically result in hard cost savings greater than $50 million per year. Another major system shared that it expects its 2,000+ nurse hires in 2024 to be nearly 100% new graduates.

Advanced Practice Registered Nurses (APRNs) — including nurse practitioners, clinical nurse specialists, nurse anesthetists, and nurse midwives — are now recognized as a solution to bridge gaps in primary and specialty care. Their expanded roles and scope of practice enable them to provide high-quality care, particularly in underserved and rural areas. Health systems are now looking to integrate APRNs more fully into their care models to mitigate physician shortages and enhance patient access to essential services.

For nurses in the United States, onboarding and orientation of new graduates are usually managed through the residency system. However, the transition from residency to practice is not always smooth; nurses often face a steep learning curve as they shift from the classroom to clinical practice. Nurses require structured support and mentorship to develop confidence and competence, and it can take 12–24 months to get newly graduated nurses “bedside ready.”

What happens if you don’t have staff on hand to provide that support? The limited availability of preceptors — experienced nurses who supervise nursing students during their clinical rotations — and mentors can hinder the effectiveness of residency programs. Additionally, preceptors in the current system are often nurses who have been promoted to the position but are not necessarily ready to deliver training. The same holds for middle management — unit managers and formal nurse educators — who are less experienced than ever, promoted due to vacancies left by their burned-out predecessors.

Residencies face other challenges. Many health systems are still anchored in a traditional time-based, one-size-fits-all training methodology for their residencies. A tiered skills acquisition model approach can streamline the process of becoming bedside ready; while tiered skills acquisition is gaining momentum, few systems have moved to this competency-based model.

Nursing residency programs must cater to the diverse needs of nurses across different specialties, each requiring customized curricula and resources tailored to their specific practice areas. Specialty-specific training — and nursing residency programs overall — are expensive, and nurse trainees are often paying off student loans while engaged in training. Most importantly, nurses come into healthcare because they want to care for patients. Inadequate training can result in poorer quality care — a nurse’s greatest fear. If nurses can’t see a clear light at the end of the tunnel, they will choose not to continue.

New solutions to nursing education

While there are no one-size-fits-all solutions to the current nurse training crisis, most health systems continue to seek engagements with education technology providers that can facilitate educational programs aligned to the workplace elements their nurses consider most important. In this space, education providers must be able to show ROI within one to two years, especially because impacts on retention can already be seen within the first 12–24 months. Health systems will evaluate the performance of new education tools based on retention, and startups should focus on reducing turnover while also improving learning outcomes. ROI associated with improving quality of care is harder to quantify; this is a less persuasive argument in the sales cycle in tough budget environments.

The systems by which nurse residencies are administered are antiquated and fragmented. Emerging technologies in the healthcare workforce space which focus on onboarding and continuing education allow nursing trainers to create modular lessons and a unified experience for trainees — one that will help them feel more committed to their institutions and want to stay long-term. Other tools focus on supporting nurses for their entire education journey and empowering them to pursue continued education (e.g. obtaining MBAs for management roles). These tools allow health systems to be more directly involved in their pipeline management by offering a platform to view staff volumes across different educational levels and providing enrichment opportunities for existing staff through continued education.? Employers that can provide a “closed loop” upskilling system for existing staff will benefit from a win-win with their employees.?

For SJF Ventures, nursing education falls at the intersection of our Education/Workforce and Healthcare verticals. Our most recent investment in healthcare education, Elemeno Health , strives to redefine nurse education by focusing on improving onboarding and orientation, digitalizing skills assessment, and providing just-in-time training.

Elemeno offers nurses an intuitive app customized to the specific policies, procedures, and strategic imperatives of their hospital. By supporting and training nurses better, Elemeno’s offering has resulted in increased nurse engagement, improvements in nurse satisfaction and retention, streamlined orientations with shortened time to value for new hires, and improved care consistency with decreases in errors and patient harm. The company’s approach applies just as well to allied health professionals, such as certified nursing assistants and medical assistants, who often go on to upskill in nursing schools. If a CNA has a positive onboarding and ongoing experience at their hospital, they are more likely to return to the same hospital after nursing school.

Future Outlook

In the long term, health systems will look beyond fulfilling their acute workforce needs and begin building more durable talent pipelines. Solutions that give health systems a more active role across multiple phases of the workforce development value chain — including recruitment, education, credentialing, onboarding/orientation, and continuing professional development — are poised to have meaningful impact.

Innovative health systems are beginning to invest in the infrastructure necessary to give them more control over their specific educational and workforce needs. Partnerships with educational institutions or third-party vendors have provided successful avenues for health systems to improve workforce productivity and retention. Some systems have sought partnerships to attract students higher in the funnel, as early as high school. Bloomberg Philanthropies, for example, is investing?$250 million to create high schools with strong healthcare system partnerships — facilitating direct placement of students in high-demand healthcare jobs. These models suggest meaningful opportunities for startups to directly engage health systems and educational institutions to build solutions.?

With investments in companies like Elemeno, SJF Ventures is amplifying our impact in advancing education access and outcomes and transforming the U.S. healthcare system. We are actively investing in this space and continue to seek new innovative partners.